19th-century idea boosts Australia's 21st-century economy

It's been described as the final act of Australian nation-building. The recently completed railroad courses up from the temperate vineyards of the south, through the deserts of Alice Springs and the Red Center, to the Top End port city of Darwin. [Editor's note: The original version incorrectly called The Ghan the world's longest railroad.]

While a transcontinental railroad seems so 19th-century, the government touts the project as a cutting-edge push into the global markets of Southeast Asia. The immediate impact, however, has a familiar frontier-days ring to it: Prosperity is coming round the bend to the dusty, one- stoplight towns in Australia's Outback.

The nailing of the last spike in October completed a dream first proposed by a Melbourne businessman in 1858. A track had been built between Adelaide and Alice Springs, but it wasn't until 2001 that construction began on the remaining 880 miles from Alice Springs to Darwin.

Now, the Northern Territory towns of Katherine and Tennant Creek, each home to fewer than 10,000 people, are beginning to see its advantages.

"I just had a report that there has already been a 15 percent reduction of freight charge into Darwin as a result of the new train," says the mayor of Katherine, Jim Forscutt, who expects the costs of all goods sold by the town to eventually fall by one-third. "Katherine will now serve as a hub - we can now sell our lemons, pink grapefruit, and bananas and make some money out of all of this."

The building of the final line also pumped millions of dollars into the local economy. Of the $805 million worth of contracts, $507 million were awarded to Northern Territory companies. The regional governments of Northern Territory and South Australia each kicked in $126 million; the rest was financed by the federal government and private investors.

High hopes are riding on the investment. According to a Northern Territory fact sheet, the national GDP is expected to increase by $3.35 billion during the operational phase - between 2003 and 2025.

The journey from Adelaide to Darwin that once took a week now takes only 48 hours. That speed has attracted private shipping companies like Freightlink to move their goods off trucks and onto the train. It has also enhanced the attractiveness of the passenger line called The Ghan. In January, Freightlink began carrying mining equipment, furniture, and fresh produce, among many other products, five times a week to Darwin. [Editor's note: The original version incorrectly referred to The Ghan as shipping freight as well as transporting people.]

Although Freightlink anticipates moving only 350,000 metric tons of goods to Darwin in their first year of operation, it hopes that figure will rise to 800,000 metric tons in just a few years. Until recently an estimated 600,000 metric tons of freight traveled this route by road.

Within two months of the start of the railway, the number of trucks through Northern Territory towns have been visibly reduced.

"The day the train started we had 30 trucks with three trailers each come through the town, but today we see hardly one or two trucks," says Ross Keenan, a freight operations manager for FCL Transport in the 3,000-strong town of Tennant Creek, noting that truckers are already being badly affected by the freight train.

Mr. Keenan, who has lived and worked in the Territory all his life, notes the changes in the types of freight heading south to Adelaide. "I know for a fact that FCL is now moving palm trees to the rest of Australia from the Northern Territory - something that is very new as they are very delicate to transport and used to get damaged by rubbing against one another. And we are also going to move prawns from Darwin down south," he says.

However, there are reports that some companies that used the line in the first few weeks changed their minds, due to damage to the goods en route.

In an interview with the Australian Broadcasting Corporation Chris Corrigan, whose Patrick Corporation jointly owns another freight business in direct competition with the new line, explained that freight rates from Singapore to Melbourne (a major port), are less than the rail cost of moving from Darwin to Melbourne. "So why would you bring a ship, unload it in Darwin and put it on a railway that is going to be more expensive than shipping it directly?" Corrigan asked.

But the train's backers counter that the real long-term profits will be found not in the 200,000-person Northern Territory but off Darwin's coast in Southeast Asia.

"Beyond our shores, we want to create opportunities to improve access to new markets, particularly in Asia," says Freightlink CEO Bruce McGowan.

At present, trade between Australia and Indonesia stands at about $5.6 billion.

The Northern Territory Express, a 6,000-ton twin-deck ship, will link Darwin to Singapore with a seven-day journey via East Timor. However, many more ships must ply to Southeast Asia, China, and northeast Asia before Darwin is established as an international port. Economists say this may take more than a decade.

"It takes time to convince shipping services that there is enough freight to warrant them stopping in Darwin on a regular basis," says Michael O'Neil, the director of the South Australian Center for Economic Studies at the University of Adelaide.

"And while it certainly cuts shipping time and cost to Southeast Asia by a week or more if ships stop in Darwin rather than Melbourne, Darwin has yet to prove that it can handle large amounts of freight," he adds.

Other experts are more skeptical.

"It's been a desperate part of the Australian attempt to achieve its destiny in its relations with nearby countries of Asia," says historian Peter Forrest of Darwin, who is skeptical of trains. He says that Australia would have been better off putting more money into its excellent road system instead of taking operators off the roads.

"The absence of proven viability is what made previous governments back away from this venture, and that should make those proponents of the railway go home and take a cold shower," he says.